The purpose of this act is to regulate the formation and
operation of risk retention groups and purchasing groups in this
state formed pursuant to the provisions of the federal liability
risk retention act of 1986, hereinafter referred to as "RRA 1986."
This article may be referred to as the "Risk Retention Act of West
Virginia."

WVC 33 - 32 - 2
§33-32-2. Definitions.

As used in this article, the term:

(a) "Commissioner" means the insurance commissioner of the
state of West Virginia or the commissioner, director or
superintendent of insurance in any other state.

(b) "Completed operations liability" means liability arising
out of the installation, maintenance or repair of any product at a
site which is now owned or controlled by:

(1) Any person who performs that work; or

(2) Any person who hires an independent contractor to perform
that work; but shall include liability for activities which are
completed or abandoned before the date of the occurrence giving
rise to the liability.

(c) "Domicile" for purposes of determining the state in which
a purchasing group is domiciled, means:

(1) For a corporation, the state in which the purchasing group
is incorporated; and

(2) For an unincorporated entity, the state of its principal
place of business.

(d) "Hazardous financial condition" means that, based on its
present or reasonably anticipated financial condition, a risk
retention group, although not yet financially impaired or
insolvent, is unlikely to be able:

(1) To meet obligations to policyholders with respect to known
claims and reasonably anticipated claims; or

(2) To pay other obligations in the normal course of business.

(e) "Insurance" means primary insurance, excess insurance,

reinsurance, surplus lines insurance and any other arrangement for
shifting and distributing risk which is determined to be insurance
under the laws of this state.

(f) "Liability" means legal liability for damages (including
costs of defense, legal costs and fees, and other claims expenses)
because of injuries to other persons, damage to their property or
other damage or loss to such other persons resulting from or
arising out of:

(1) Any business (whether profit or nonprofit), trade,
product, services (including professional services), premises or
operations;

(2) Any activity of any state or local government, or any
agency or political subdivision thereof; or

(3) Does not include personal risk liability and an employer's
liability with respect to its employees other than legal liability
under the Federal Employers' Liability Act.

(g) "Personal risk liability" means liability for damages
because of injury to any person, damage to property, or other loss
or damage resulting from any personal, familial, or household
responsibilities or activities, rather than from responsibilities
or activities referred to in subsection (f);

(h) "Plan of operation" or a "feasibility study" means an
analysis which presents the expected activities and results of a
risk retention group including at a minimum:

(1) Information sufficient to verify that its members are
engaged in businesses or activities similar or related with respect
to the liability to which such members are exposed by virtue of any related, similar or common business, trade, product services,
premises or operations;

(2) For each state in which the risk retention group intends
to operate, the coverages, deductibles, coverage limits, rates and
rating classification systems for each line of insurance the group
intends to offer;

(3) Historical and expected loss experience of the proposed
members and national experience of similar exposures to the extent
that this experience is reasonably available;

(4) Pro forma financial statements and projections;

(5) Appropriate opinions by a qualified, independent casualty
actuary, including a determination of minimum premium or
participation levels required to commence operations and to prevent
a hazardous financial condition;

(7) Identification of each state in which the risk retention
group has obtained, or sought to obtain, a charter and license, and
a description of the risk retention group's status in each such
state; and

(8) Such other matters as may be prescribed by the
commissioner for liability insurance companies authorized by the
insurance laws of the state in which the risk retention group is
chartered.

(i) "Product liability" means liability for damages because of
any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the
loss of use of property) arising out of the manufacture, design,
importation, distribution, packaging, labeling, lease or sale of a
product, but does not include the liability of any person for those
damages if the product involved was in the possession of such a
person when the incident giving rise to the claim occurred.

(j) "Purchasing group" means any group which:

(1) Has as one of its purposes the purchase of liability
insurance on a group basis;

(2) Purchases such insurance only for its group members and
only to cover their similar or related liability exposure, as
described in subsection (j)(3) of this section;

(3) Is composed of members whose businesses or activities are
similar or related with respect to the liability to which members
are exposed by virtue of any related, similar, or common business,
trade, product, services, premises or operations; and

(4) Is domiciled in any state.

(k) "Risk retention group" means any corporation or other

limited liability association formed under the laws of any state:
(1) Whose primary activity consists of assuming and spreading
all, or any portion, of the liability exposure of its group
members;

(2) Which is organized for the primary purpose of conducting
the activity described under subdivision (1), subsection (k) of
this section;

(3) Which: (A) Is chartered and licensed as a liability
insurance company and authorized to engage in the business of insurance under the laws of any state; or

(B) Before the first day of January, one thousand nine hundred
eighty-five, was chartered or licensed and authorized to engage in
the business of insurance under the laws of Bermuda or the Cayman
Islands, and, before such date, had certified to the insurance
commissioner of at least one state that it satisfied the
capitalization requirements of such state, except that any such
group shall be considered to be a risk retention group only if it
has been engaged in business continuously since such date and only
for the purpose of continuing to provide insurance to cover product
liability or completed operations liability as such terms were
defined in the product liability risk retention act of 1981 before
the date of the enactment of the risk retention act of 1986;

(4) Which does not exclude any person from membership in the
group solely to provide for members of such a group a competitive
advantage over such a person;

(5) Which: (A) Has as its owners only persons who comprise
the membership of the risk retention group and who are provided
insurance by such group; or

(B) Has as its sole owner an organization which has as: (i)
Its members only persons who comprise the membership of the risk
retention group; and

(ii) Its owners only persons who comprise the membership of
the risk retention group and who are provided insurance by such
group;

(6) Whose members are engaged in businesses or activities
similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common
business trade, product, services, premises or operations;

(7) Whose activities do not include the provision of insuranceother than:

(A) Liability insurance for assuming and spreading all or any
portion of the liability of its group members; and

(B) Reinsurance with respect to the liability of any other
risk retention group or any members of such other group which is
engaged in businesses or activities so that such group or member
meets the reinsurance requirement set forth herein, from membership
in the risk retention group which provides such reinsurance; and

(8) The name of which includes the phrase "Risk Retention
Group."

(l) "State" means any state of the United States or the
District of Columbia.

(a) A risk retention group shall, pursuant to the provisions
of article five of this chapter, be chartered and licensed to write
only liability insurance pursuant to this article and, except as
provided elsewhere in this article, shall comply with all of the
laws, rules and requirements applicable to insurers chartered and
licensed in this state and with section four of this article, to
the extent such requirements are not a limitation on laws, rules or
requirements of this state.

(b) Notwithstanding any other provision of this chapter to the
contrary, all risk retention groups chartered in this state shall
file with the commissioner and the national association of
insurance commissioners, an annual statement on a form prescribed
by the national association of insurance commissioners and in
diskette form, if required by the commissioner and completed in
accordance with the national association of insurance
commissioners' instructions and the national association of
insurance commissioners accounting practices and procedures manual.

(c) Before it may offer insurance in any state, each risk
retention group shall also submit for approval by the insurance
commissioner of this state a plan of operation or feasibility
study. The risk retention group shall submit an appropriate
revision of such plan or study, in the event of any subsequent
material change in any item of the plan of operation or feasibility
study, within ten days of any such change. The risk retention
group shall not offer any additional kinds of liability insurance,
in this state or in any other state, until a revision of the plan or study is approved by the commissioner.

(d) At the time of filing its application for a charter, the
risk retention group shall provide to the commissioner in summary
form the following information: The identity of the initial
members of the group, the identity of those individuals who
organized the group or who will provide administrative services or
otherwise influence or control the activities of the group, the
amount and nature of initial capitalization, the coverages to be
afforded, and the states in which the group intends to operate.
Upon receipt of this information, the commissioner shall forward
the information to the national association of insurance
commissioners. Providing notification to the national association
of insurance commissioners is in addition to and shall not be
sufficient to satisfy the requirements of section four or any other
sections of this article.

(e) Risk retention groups are subject to the provisions of
article thirty-three, article thirty-four, article thirty-seven and
article thirty-nine of this chapter.

(a) Risk retention groups chartered in states other than this
state and seeking to do business as a risk retention group in this
state must observe and abide by the laws of this state.

(b) Before offering insurance in this state, a risk retention
group shall submit the following information to the commissioner on
a form prescribed by the national association of insurance
commissioners:

(1) A statement identifying the state or states in which the
risk retention group is chartered and licensed as a liability
insurance company, date of chartering, its principal place of
business, and any other information including information on its
membership, as the commissioner of this state may require to verify
that the risk retention group is qualified under this article;

(2) A copy of its plan of operations or a feasibility study
and revisions of such plan or study submitted to its state of
domicile: Provided,
That the provision relating to the submission
of a plan of operation or a feasibility study shall not apply with
respect to any line or classification of liability insurance which
(A) was defined in the federal product liability risk retention act
of 1981 before the twenty-seventh day of October, one thousand nine
hundred eighty-six, and (B) was offered before that date by any
risk retention group which had been chartered and operating for not
less than three years before such date;

(3) A statement of registration which designates the
commissioner as its agent for the purpose of receiving service of
legal documents or process; and

(4) A risk retention group that has been chartered and
operating in any state and has previously filed an annual financial
statement as required by this section with its state of domicile,
must submit a copy of the most recent annual statement with the
registration form required by this subsection.

(c) The risk retention group shall submit a copy of any
revision to its plan of operation or feasibility study required by
section three of this article at the same time that the revision is
submitted to the commissioner of its chartering state.

(d) A risk retention group shall not commence offering
insurance in this state prior to receiving a certificate of
registration from the commissioner.

(e) Any risk retention group registered in this state shall
submit to the commissioner:

(1) Annually a copy of the group's financial statement
submitted to its state of domicile, which shall be certified by an
independent public accountant and contain a statement of opinion on
loss and loss adjustment expense reserves made by a member of the
American academy of actuaries or a qualified loss reserve
specialist pursuant to criteria established by the national
association of insurance commissioners);

(2) A copy of each examination of the risk retention group as
certified by the commissioner or public official conducting the
examination;

(3) Upon request by the commissioner, a copy of any audit
performed with respect to the risk retention group; and

(4) Any information as may be required to verify its continuing qualification as a risk retention group under this
article.

(f) The commissioner shall promulgate rules pursuant to the
provisions of chapter twenty-nine-a of this code regarding all fees
to be submitted with the filings required by this section.

WVC 33 - 32 - 5
§33-32-5. Tax on premiums collected.
(a) Each risk retention group shall pay to the commissioner,
annually on the first day of March, a tax at the rate of two
percent of the taxable premiums on policies or contracts of
insurance covering property or risks in this state and on risk and
property situated elsewhere upon which no premium tax is otherwise
paid during the previous year. Each risk retention group is also
subject to the additional premium taxes levied by sections
fourteen-a and fourteen-d, article three of this chapter.

(b) The taxes provided for in this section constitute all
taxes collectible under the laws of this state from any risk
retention group, and no other premium tax or other taxes shall be
levied or collected from any risk retention group by the state or
any county, city or municipality within this state, except ad
valorem taxes. Each risk retention group shall be subject to the
same interests, additions, fines and penalties for nonpayment as
are generally applicable to insurers.

(c) To the extent that a risk retention group uses insurance
agents, each agent shall keep a complete and separate record of all
policies procured from each risk retention group. The record shall
be open to examination by the commissioner, as provided in section
nine, article two of this chapter. These records shall, for each
policy and each kind of insurance provided under the policy,
include the following:

(1) The limit of liability;

(2) The time period covered;

(3) The effective date;

(4) The name of the risk retention group which issued the

policy;

(5) The gross premium charged; and

(6) The amount of return premiums, if any.

WVC 33 - 32 - 6
§33-32-6. Compliance with unfair claims settlement practices law.
Any risk retention group, its agents and representatives,
shall comply with the laws of this state, as set forth in chapter
thirty-three of this code, regarding unfair claims settlement
practices act of this state.

Any risk retention group shall comply with the laws of this
state, as provided in chapter thirty-three of this code, regarding
prohibitive, deceptive, false or fraudulent acts or practices.
However, if the commissioner seeks an injunction regarding such
conduct, the injunction must be obtained from a court of competent
jurisdiction.

WVC 33 - 32 - 8
§33-32-8. Examination regarding financial condition.

Any risk retention group must submit to an examination by the
commissioner to determine its financial condition if the
commissioner of the jurisdiction in which the group is chartered
has not initiated an examination or does not initiate an
examination within sixty days after a request by the commissioner
of this state. Any such examination shall be coordinated to avoid
unjustified repetition and conducted in an expeditious manner. The
risk retention group shall be subject to the provisions of section
nine, article two of this chapter in regard to the expense and
conduct of the examination. Any such examination shall be
conducted in accordance with the national association of insurance
commissioners examiners handbook.

WVC 33 - 32 - 9
§33-32-9. Notice to purchasers.

Every application form for insurance from a risk retention
group and any policy issued by a risk retention group shall contain
in ten-point type on the front page and the declaration page, the
following notice:

NOTICE
This policy is issued by your risk retention group. Your risk
retention group may not be subject to all of the insurance laws and
rules of your state. State insurance insolvency guaranty funds are
not available for your risk retention group.

No risk retention group shall be allowed to do
business in this state if an insurance company is directly or
indirectly a member or owner of such risk retention group, other
than in the case of a risk retention group all of whose members are
insurance companies.

WVC 33 - 32 - 12
§33-32-12. Prohibited coverage.

No risk retention group may offer insurance policy
coverage prohibited by chapter thirty-three of this code or ruled
unlawful by the highest court of this state.

WVC 33 - 32 - 13
§33-32-13. Delinquency proceedings.

A risk retention group not chartered in this state
and doing business in this state must comply with a lawful order
issued in a voluntary dissolution proceeding or in a delinquency
proceeding commenced by a state insurance commissioner if there has
been a finding of financial impairment after an examination under
section four of this article.

WVC 33 - 32 - 14
§33-32-14. Compulsory associations.

(a) A risk retention group shall not be permitted to join or
contribute financially to any insurance insolvency guaranty fund,
or similar mechanism, in this state, nor shall any risk retention
group, or its insureds, or claimants against its insureds, receive
any benefit from any such fund for claims arising out of the
operations of such risk retention group.

(b) When a purchasing group obtains insurance covering its
members' risks from an insurer not authorized in this state or a
risk retention group, such risks, wherever resident or located,
shall not be covered by any insurance guaranty fund or similar
mechanism in this state.

(c) When a purchasing group obtains insurance covering its
members' risks from an authorized insurer, only risks resident or
located in this state shall be covered by the state guaranty fund
subject to article twenty-six of this chapter.

WVC 33 - 32 - 15
§33-32-15. Countersignatures not required.

A policy of insurance issued to a risk retention
group or any member of that group shall not be required to be
countersigned.

A purchasing group and its insurer or insurers shall be
subject to all applicable laws of this state, except that a
purchasing group and its insurer or insurers shall be exempt, in
regard to liability insurance for the purchasing group, from any
law that would:

(1) Prohibit the establishment of a purchasing group;

(2) Make it unlawful for an insurer to provide or offer to
provide insurance on a basis providing, to a purchasing group or
its members, advantages based on their loss and expense experience
not afforded to other persons with respect to rates, policy forms,
coverages or other matters;

(3) Prohibit a purchasing group or its members from purchasing
insurance on a group basis described in subsection (b) of this
section;

(4) Prohibit a purchasing group from obtaining insurance on a
group basis because the group has not been in existence for a
minimum period of time or because any member has not belonged to
the group for a minimum period of time;

(5) Require that a purchasing group have a minimum number of
members, common ownership or affiliation, or a certain legal form;

(6) Require that a certain percentage of a purchasing group
obtain insurance on a group basis;

(7) Otherwise discriminate against a purchasing group or any
of its members; or

(8) Require that any insurance policy issued to a purchasing group or any of its members be countersigned by an insurance agent
or broker residing in this state.

(a) A purchasing group which intends to do business in this
state shall, prior to doing business, furnish notice to the
commissioner, on forms prescribed by the national association of
insurance commissioners, which such forms shall:

(1) Identify the state in which the group is domiciled;

(2) Identify all other states in which the group intends to do
business;

(3) Specify the lines and classifications of liability
insurance which the purchasing group intends to purchase;

(4) Identify the insurance company or companies from which the
group intends to purchase its insurance and the domicile of such
company;

(5) Specify the method by which, and the person or persons, if
any, through whom insurance will be offered to its members whose
risks are resident or located in this state;

(6) Identify the principal place of business of the groups;
and

(7) Provide any other information as may be required by the
commissioner to verify that the purchasing group is qualified under
this article.

(b) A purchasing group shall, within ten days, notify the
commissioner of any changes in any of the items set forth in this
section.

(c) The purchasing group shall register with and designate the
commissioner, (or other appropriate authority), as its agent solely for the purpose of receiving service of legal documents or process:
Provided,
That these requirements do not apply in the case of a
purchasing group which:

(1) Was domiciled before the first day of April, one thousand
nine hundred eighty-six, in any state of the United States; and

(2) Is domiciled on and after the twenty-seventh day of
October, one thousand nine hundred eighty-six, in any state of the
United States and which:

(A) Before the twenty-seventh day of October, one thousand
nine hundred eighty-six, purchased insurance from an insurance
carrier licensed in any state; and

(B) Since the twenty-seventh day of October, one thousand nine
hundred eighty-six, purchased its insurance from an insurance
carrier licensed in any state;

(3) Which was a purchasing group under the requirements of the
product liability risk retention act of 1981, before the twenty-seventh day of October, one thousand nine hundred eighty-six; and

(4) Which does not purchase insurance that was not authorized
for purposes of an exemption under that act, as in effect before
the twenty-seventh day of October, one thousand nine hundred
eighty-six.

(d) Each purchasing group that is required to give notice
pursuant to subsection (a) of this section shall also furnish such
information as may be required by the commissioner to:

(1) Verify that the entity qualifies as a purchasing group;

(2) Determine where the purchasing group is located; and

(3) Determine appropriate tax treatment.

(e) The insurance commissioner shall promulgate rules pursuant
to the provisions of chapter twenty-nine-a of this code regarding
the amount of all registration or filing fees required by this
section.

(a) A purchasing group may not purchase insurance from a risk
retention group that is not chartered in a state or from an insurer
not admitted in the state in which the purchasing group is located,
unless the purchase is effected through a licensed agent or broker
acting pursuant to the surplus lines laws and regulations of such
state.

(b) A purchasing group which obtains liability insurance from
an insurer not admitted in this state or a risk retention group
shall inform each of the members of the group which has a risk
resident or located in this state that the risk is not protected by
an insurance insolvency guaranty fund in this state, and that the
risk retention group or insurer may not be subject to all insurance
laws and regulations of this state. To give notice as required by
this section, the purchasing group shall ensure that each group
certificate or evidence of insurance has printed or stamped in
contrasting color on the front page the following statement:

THIS INSURER IS NOT LICENSED TO DO BUSINESS IN WEST
VIRGINIA, AND IS NOT SUBJECT TO THE WEST VIRGINIA
INSURANCE GUARANTY ACT OR TO ALL OF THE PROTECTIONS
OF THE INSURANCE LAWS AND RULES OF THIS STATE.
(c) A purchasing group shall not purchase insurance providing
for a deductible or self-insured retention applicable to the group
as a whole: Provided,
That coverage may provide for a deductible
or self-insured retention applicable to individual members.

(d) Purchases of insurance by purchasing groups are subject to the same standards regarding aggregate limits which are applicable
to all purchases of group insurance.

The commissioner is authorized to make use of any of the
powers established under this chapter of this code to enforce the
laws of this state so long as those powers are not specifically
preempted by the national product liability risk retention act of
1981, as amended by the risk retention amendments of 1986. This
includes, but is not limited to, the commissioner's administrative
authority to investigate, issue subpoenas, conduct depositions and
hearings, issue orders, and impose penalties and seek injunctive
relief. With regard to any investigation, administrative
proceedings, or litigation, the commissioner can rely on the law
and rules of the state. The injunctive authority of the
commissioner in regard to risk retention groups is restricted by
the requirement that any injunction be issued by a court of
competent jurisdiction.

WVC 33 - 32 - 20
§33-32-20. Penalties.

A risk retention group which violates any provision
of this Act will be subject to fines and penalties applicable to
licensed insurers generally, including revocation of its license
and/or the right to do business in this state.

(a) A person, or a person working for a firm, association or
corporation, shall not act or aid in any manner in soliciting,
negotiating or procuring liability insurance in this state from a
risk retention group unless such person, or person working for a
firm, association or corporation, is licensed as an insurance agent
in accordance with article twelve of this chapter.

(b) A person, or a person working for a firm, association or
corporation, shall not act or aid in any manner in soliciting,
negotiating or procuring liability insurance in this state for a
purchasing group from an authorized insurer or a risk retention
group chartered in a state unless such person, or person working
for a firm, association or corporation, is licensed as an insurance
agent in accordance with article twelve of this chapter.

(c) A person, or a person working for a firm, association or
corporation, shall not act or aid in any manner in soliciting,
negotiating or procuring liability insurance coverage in this state
for any member of a purchasing group under a purchasing group's
policy unless such person, or person working for a firm,
association or corporation, is licensed as an insurance agent in
accordance with article twelve of this chapter.

(d) A person, or a person working for a firm, association or
corporation, shall not act or aid in any manner in soliciting,
negotiating or procuring liability insurance from an insurer not
authorized to do business in this state on behalf of a purchasing
group located in this state unless such person, or person working
for a firm, association or corporation, is licensed as an excess line broker in accordance with section thirteen, article twelve of
this chapter.

(e) For purposes of acting as an agent for a risk retention
group or purchasing group pursuant to the provisions of this
section, the requirement of residence in this state shall not
apply.

(f) Every person, or person working for a firm, association or
corporation, licensed pursuant to the provisions of this chapter,
on business placed with risk retention groups or written through a
purchasing group, shall inform each prospective insured of the
provisions of the notice required by section nine of this article
in the case of a risk retention group and in the case of a
purchasing group, the notice required by subsection (b), section
eighteen of this article.

An order issued by any district court of the United States
enjoining a risk retention group from soliciting or selling
insurance, or operating, in any state (or in all states or in any
territory or possession of the United States) upon a finding that
such a group is in a hazardous financial condition shall be
enforceable in the courts of the state.

WVC 33 - 32 - 23
§33-32-23. Rules.

The commissioner may establish and from time to time
amend such rules relating to risk retention groups as may be
necessary or desirable to carry out the provisions of this article.

WVC 33 - 32 - 24
§33-32-24. Operation prior to enactment.

(a) In addition to complying with the requirements of this
article, any risk retention group operating in this state prior to
enactment of the amendments made to this article in the regular
session of the Legislature during the year one thousand nine
hundred ninety-two shall comply with the provisions of subsection
(a), section four of this article before the thirty-first day of
December, one thousand nine hundred ninety-two.

(b) Any purchasing group which was doing business in this
state prior to enactment of the amendments made to this article in
the regular session of the Legislature during the year one thousand
nine hundred ninety-two shall furnish notice to the commissioner
pursuant to the provisions of section seventeen of this article
before the thirty-first day of December, one thousand nine hundred
ninety-two.

Note: WV Code updated with legislation passed through the 2014 1st Special Session
The WV Code Online is an unofficial copy of the annotated WV Code, provided as a convenience. It has NOT been edited for publication, and is not in any way official or authoritative.